Texas Funeral Prearrangement License Practice Exam

Question: 1 / 400

What must happen to the funds collected under a preneed contract before the client's death?

They are returned to the client

They must be placed into a trust account or approved funding mechanism

The funds collected under a preneed contract must be placed into a trust account or an approved funding mechanism to ensure their protection and appropriate management until the client's death. This requirement is designed to safeguard the funds for the intended purpose of paying for funeral services. By placing the money in a trust account, it remains dedicated to fulfilling the terms of the preneed contract and is not available for the funeral provider's immediate expenses or other uses, thereby preserving the financial integrity of the contract. This practice reflects a commitment to ethical standards in the funeral industry, ensuring that the client’s wishes regarding their funeral services will be honored when the time comes.

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They can be used for immediate expenses

They must be invested in stocks or bonds

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